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Managerial Economics · Game theory & oligopoly

BSMS3206 · 10 questions · 10 marks · 3 papers

Answer key

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

BSMS3206 · Managerial Economics

Game theory & oligopoly

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
NAT: Numerical response. No negative marking.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

End Term · 31 Aug 2025 (FN)End Term

Read the passage below, then answer Q1–Q6
A monopolist can produce at a constant average (and marginal) cost of AC = MC = $5. It faces a market demand curve given by Q = 53 – P.
Based on the above data, answer the given subquestions.
Q1NAT1 Mark·Write the number
Key ↓
Suppose a second firm enters the market. Let Q_1 be the output of the first firm and Q_2 be the output of the second. Market demand is now given by Q_1 + Q_2 = 53 – P. Assuming that this second firm has the same costs as the first and the firms are competing as per the Cournot competition, find out the equilibrium quantity for both firms, equilibrium price and difference in profit of a firm compared to monopolist case.
Your answer:
Q2NAT1 Mark·Write the number
Key ↓
Suppose a second firm enters the market. Let Q_1 be the output of the first firm and Q_2 be the output of the second. Market demand is now given by Q_1 + Q_2 = 53 – P. Assuming that this second firm has the same costs as the first and the firms are competing as per the Cournot competition, find out the equilibrium quantity for both firms, equilibrium price and difference in profit of a firm compared to monopolist case.
Your answer:
Q3NAT1 Mark·Write the number
Key ↓
Suppose a second firm enters the market. Let Q_1 be the output of the first firm and Q_2 be the output of the second. Market demand is now given by Q_1 + Q_2 = 53 – P. Assuming that this second firm has the same costs as the first and the firms are competing as per the Cournot competition, find out the equilibrium quantity for both firms, equilibrium price and difference in profit of a firm compared to monopolist case.
Your answer:
Q4NAT2 Marks·Write the number
Key ↓
Suppose a second firm enters the market. Let Q_1 be the output of the first firm and Q_2 be the output of the second. Market demand is now given by Q_1 + Q_2 = 53 – P. Assuming that this second firm has the same costs as the first and the firms are competing as per the Cournot competition, find out the equilibrium quantity for both firms, equilibrium price and difference in profit of a firm compared to monopolist case. Now suppose that the two firms are competing in the Stackelberg manner where one of the firms makes its output decision before the other. Suppose Firm 1 is the Stackelberg leader (i.e., makes its output decisions before Firm 2). Calculate the equilibrium quantity for both the firms, equilibrium market price and difference in profit of both firms compared to Cournot case.
Your answer:
Q5NAT1 Mark·Write the number
Key ↓
Suppose a second firm enters the market. Let Q_1 be the output of the first firm and Q_2 be the output of the second. Market demand is now given by Q_1 + Q_2 = 53 – P. Assuming that this second firm has the same costs as the first and the firms are competing as per the Cournot competition, find out the equilibrium quantity for both firms, equilibrium price and difference in profit of a firm compared to monopolist case. Now suppose that the two firms are competing in the Stackelberg manner where one of the firms makes its output decision before the other. Suppose Firm 1 is the Stackelberg leader (i.e., makes its output decisions before Firm 2). Calculate the equilibrium quantity for both the firms, equilibrium market price and difference in profit of both firms compared to Cournot case.
Your answer:
Q6NAT1 Mark·Write the number
Key ↓
Suppose a second firm enters the market. Let Q_1 be the output of the first firm and Q_2 be the output of the second. Market demand is now given by Q_1 + Q_2 = 53 – P. Assuming that this second firm has the same costs as the first and the firms are competing as per the Cournot competition, find out the equilibrium quantity for both firms, equilibrium price and difference in profit of a firm compared to monopolist case. Now suppose that the two firms are competing in the Stackelberg manner where one of the firms makes its output decision before the other. Suppose Firm 1 is the Stackelberg leader (i.e., makes its output decisions before Firm 2). Calculate the equilibrium quantity for both the firms, equilibrium market price and difference in profit of both firms compared to Cournot case.
Your answer:
Q7MCQ1 Mark·Choose one option
Asked 2 times Key ↓
Which of the following is true about monopolistic competition?
1. AFirms compete by selling differentiated products that are highly, but not perfectly substitutable
2. BThere is free entry and exit from the market
3. CBoth Firms compete by selling differentiated products that are highly, but not perfectly substitutable & There is free entry and exit from the market
4. DNone of these

End Term · 31 Aug 2025 (AN)End Term

Q8MCQ1 Mark·Choose one option
Asked 2 times Key ↓
What is true about monopolistic competition
1. AFirms compete by selling differentiated products that are highly, but not perfectly, substitutable
2. BEntry and exit are free in the market
3. CNone
4. DBoth the firms compete by selling differentiated products that are highly, but not perfectly, substitutable and entry and exit are free in the market

Quiz 2 · 3 Aug 2025 (AN)Quiz 2

Read the passage below, then answer Q9–Q10
Consider the following game matrix where only the payoff of player 1 is given.
Based on the above data, answer the given subquestions.
Q9MCQ0.5 Marks·Choose one option
Key ↓
M weakly dominates T
1. ATrue
2. BFalse
Q10MCQ0.5 Marks·Choose one option
Key ↓
M weakly dominates B
1. ATrue
2. BFalse

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q132

Q221

Q3320

Q436

Q517

Q680

Q7C

Q8D

Q9A

Q10B

Questions and answer keys are reproduced from the official IIT Madras BS papers. Topics and repeated question types are BTechi’s own grouping. BTechi is not affiliated with IIT Madras.